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CUs in Arkansas, Oklahoma, Texas Completed Over $3.3 Billion in Mortgages During First Six Months of 2013

Tuesday, September 24, 2013 6:55 AM

Existing-home sales increased in August and reached the highest level in six-and-a-half years, while the median price shows nine consecutive months of double-digit year-over-year increases, according to the National Association of Realtors®.

Rick Grady, vice president of Research for the Cornerstone Credit Union League, says during 2012, credit unions in the three-state area wrote nearly $6.2 billion worth of real estate loans.

“Given the increased pace in mortgages, it appears that volume will be surpassed in 2013,” notes Grady. “During the first six months of this year credit unions across Arkansas, Oklahoma and Texas completed over $3.3 billion in mortgages. This excludes the peak buying months of July and August, data that will be compiled after the close of third quarter. Together, credit unions in the tri-state area manage over $18 billion in real estate loans.”

Rick Pustejovsky, mortgage lending manager at FirstLight FCU, says in the last four months, his credit union has seen a significant peak in mortgage loan applications.

“With interest rates starting to climb, consumers who have been sitting on the fence are now jumping into the real estate market because they want to take advantage of low interest rates while they’re still available,” notes Pustejovsky.

According to Pustejovsky, FirstLight FCU has about $609 million in loans, and of that, $164 million are mortgage loans, and another $38 million are in real estate related business loans. He says these loans are performing quite well.

“We only have about $4 to $4.5 million in total delinquencies, and only $2 million of that is the result of foreclosure,” he says.

While the purchase volume has increased dramatically, Pustejovsky says mortgage refinancing has dramatically decreased. He does note that this time last year, 40 percent of the mortgage refinances the credit union made last year were equity cash out. This year, less than 10 percent are has been equity cash out.

“Property values took a real hit in the economic recession, so using the house as an ATM machine hasn’t been an option for many homeowners,” he says.

Pustejovsky, who is on the board of the Texas Credit Union Real Estate Network (CUREN), believes real estate lending is an opportunity so many credit unions miss.

“From my perspective, more credit unions aren’t actively engaged in real estate lending because they don’t understand the benefits of offering this service, or they’re concerned about the risks,” he says. “The key is having someone on staff who is experienced in handling your mortgage portfolio.”

If you’re new to mortgage lending, Pustejovsky believes it’s a good rule of thumb to keep 20 percent of your mortgage loans on the books and sell 80 percent. After you’ve been doing it awhile, you can keep more on the books. Pustejovsky says he typically retains 80 percent and sells 20 percent.

Another challenge Pustejovsky finds is that realtors don’t realize that credit unions are in the mortgage business.

“I’ve found this to be a real problem,” he adds. “But, it’s a problem that can be solved. I spend a great deal of time educating local realtors of what we can offer their clients.”

Other highlights from the National Association of Realtors®:

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.7 percent to a seasonally adjusted annual rate of 5.48 million in August from 5.39 million in July, and are 13.2 percent higher than the 4.84 million-unit level in August 2012.

Sales are at the highest pace since February 2007, when they hit 5.79 million, and have remained above year-ago levels for the past 26 months.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.46 percent in August from 4.37 percent in July, and is the highest since July 2011 when it was 4.55 percent; the rate was 3.60 percent in August 2012.

The national median existing-home price for all housing types was $212,100 in August, up 14.7 percent from August 2012. This is the strongest year-over-year price gain since October 2005 when the median rose 16.6 percent and marks 18 consecutive months of year-over-year price increases.

Distressed homes, which includes foreclosures and short sales accounted for 12 percent of August sales, down from 15 percent in July, and is the lowest share since monthly tracking began in October 2008. They were 23 percent in August 2012. Ongoing declines in the share of distressed sales are responsible for some of the growth in median price.

Eight percent of August sales were foreclosures, and 4 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in August, while short sales were discounted 12 percent.